Australia’s current thin capitalization regime
prevents excessive debt allocation to Australian
multinational businesses by imposing safe harbour
limits. With the government proposing to reduce
the safe harbour gearing limits down from 75
percent to 60 percent, greater reliance on the
arm’s length debt test is expected for those
borderline cases that may breach safe harbour test
under the changed law. Read more

Most groups will already have
commenced an accounting period under Australia’s
new transfer pricing self-assessment regime. The
new rules require a taxpayer to consider the
substance and form of each transaction. While
this could be considered at year-end, it is
prudent to consider the position on a real-time
basis if the aim is to have a “reasonably
arguable position” to support a self-assessment
position and mitigate potential penalties. Read more

Other

Country-by-country reporting

March 2014

Australian taxpayers are already
subject to extensive transfer pricing
recordkeeping rules, following last year’s passage
of Tax Laws Amendment (Countering Tax Avoidance
and Multinational Profit Shifting) Act 2013. What
would be the effect of country-by-country
reporting, as proposed in an initial draft
template of the Organisation for Economic
Cooperation and Development (OECD)?Read more

Enterprises registered under
the Shanghai “pilot” free trade zone program must
publicly release certain business information.
Accordingly, these enterprises need to pay
attention to the timeline and contents of annual
reporting. Read more

The People’s Bank of China
(Shanghai headquarters) issued guidance concerning
the expansion of RMB cross-border business in
the Shanghai “pilot” free trade zone.Read more

Newly effective law—the
Companies Ordinance—in Hong Kong is designed to
facilitate business by modernising the company
law regime and enhancing regulation.Read more

Profit tax on captive insurers
business

2014-2015

Under new legislation in Hong
Kong, “captive insurers” will benefit from a 50
percent reduction in the profits tax on their
insurance business of offshore risks.Read more

Tax compliance

2013/14

The Inland Revenue Department
issued an interim administrative measure,
announcing that it will accept profits tax returns
for 2013/14 if assessable profits are computed
on a “fair value” basis.Read more

The Delhi bench of the Income-tax
Appellate Tribunal held that a corporate
guarantee issued by the taxpayer for the benefit
of its related entities (and that did not involve
any costs or have any bearing on profits) was not
an “international transaction” for purposes of
India’s transfer pricing rules.Read more

Israel’s tax authority in early
March 2014 published guidance providing certain
relief with respect to the taxation of Israeli
resident beneficiary trusts.Read more

Proposed legislation

FATCA

March 2014

The Bank of Israel published
draft guidance for banking corporations to
prepare for the implementation of the FATCA
provisions, whether or not an intergovernmental
agreement is signed with the United States before
July 1, 2014.Read more

Following the Singapore’s 2014
budget statement (presented 21 February 2014),
KPMG in Singapore has prepared an analysis of
changes and initiatives in the 2014 budget.Read more

Administrative and case law

Capital gains

Comptroller of Income Tax v.
BBO (2014) MSTC 70-029

The Court of Appeal affirmed a
decision of the High Court, finding that shares
that an insurance company held in three other
entities (i.e., core shares) were capital assets.
Thus, the gain on disposal of these shares was
capital and not subject to tax.Read more

Taiwan’s Executive Yuan on 13
March 2014 passed draft amendments to the income
tax law, VAT law, and business tax law, and with
this action, the legislation is sent to the
Legislative Yuan for its consideration.Read more

March 2014

Taiwan’s Finance Minister
recently discussed proposals to:

•

Increase the business tax rates on the
banking and insurance industries

•

Reduce the imputation credit ratio on
dividends

•

Increase the income tax rate of high-income
earners

•

Extend the period to claim investment tax
credit on R&D expenditures

•

Provide tax incentives to encourage
enterprises to hire more
employees